eToro has announced a strategic partnership with BNY and stock lending platform EquiLend to launch a new stock lending program, aimed at facilitating the identification of borrowers and enhancing the stock lending process. This initiative exemplifies eToro’s commitment to utilizing BNY’s extensive global clearing platform, which provides integrated solutions encompassing US and international clearing, custody, settlement, execution, and financing.
The stock lending program will enable users in the UK and Europe to generate passive income by lending their stocks. Eligible stocks will consist of whole unit “real” stock positions; however, Contracts for Difference (CFDs) and fractional shares will not qualify. Additionally, eligible shares will be rounded down to the nearest whole unit.
eToro believes that stocks characterized by low market liquidity, high volatility, and strong demand are more likely to attract borrowers, potentially yielding greater earnings. Through this collaboration, eToro, BNY, and EquiLend have devised a scalable global operating model, granting clients access to over 19 exchanges worldwide.
Under the program, eToro users who opt to lend their stocks will temporarily transfer ownership to borrowers, which means they will relinquish voting rights during the loan period. However, they will continue to receive dividends and retain the option to sell their stocks or withdraw from the program at any time without incurring any fees.
Initially, the stock lending feature will be available to members of the eToro Club, which was established to honor valued clients. Membership is categorized into five tiers, with Platinum users receiving priority access to the stock lending program, followed by other tiers over time.
Eligible users will have the opportunity to opt in; upon acceptance, their entire portfolio of stock positions will be considered for lending. Additionally, they will receive monthly statements detailing any successful loans and the income generated.
Dan Dougherty, Managing Director and Global Head of Sales and Account Management at EquiLend, emphasized that this collaboration with eToro enhances their services with an advanced paid lending program, reinforcing their commitment to innovation. He also noted eToro’s dedication to delivering efficient and contemporary financial solutions to its user base.
Victor O’Laughlen, Head of Global Clearing at BNY, remarked that this partnership supports a comprehensive solution set, covering clearing, settlement, custody, foreign exchange, and cash management. He expressed that this initiative showcases the strengths of eToro, EquiLend, and BNY’s renowned platform, offering investors access to a cutting-edge feature in their investment journeys.
Yossi Brandes, VP of Execution Services at eToro, underscored that stock lending has historically been dominated by large financial institutions, making it challenging for retail investors to earn passive income through this avenue. He asserted the importance of stock lending in providing liquidity to financial markets and reiterated eToro’s goal of democratizing access to this practice, enabling millions of UK and European users to engage in stock lending in a straightforward and transparent manner.